OVP’s Rick LeFaivre on Venture Capital and the Future of Cleantech

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sweet spot between mom-and-pop operations and huge projects that need $100 million up front (e.g., building wind farms). “Where are the opportunities in the middle with venture economics, where you can do a $5-10 million A round, then get scalable and begin to acquire customers, and then do a B round? We’re doing a lot of poking around, looking at what will grow in the fertile ground of the Northwest.”

At Xconomy, we’ve been hearing a lot about smart-grid technologies in Washington state, so I asked LeFaivre about where the venture opportunities are there. That’s where he invoked an analogy to the Internet. “The Internet was not a giant top-down design. It was a bottoms-up thing,” he says. “Vint Cerf and others defined a small number of standards, and said, ‘If you can interpret and follow these standards, you can be a member of Arpanet.’ Now, is the grid similar?”

Given the existing power grid system, it’s like trying to rebuild an airplane while you’re flying it, LeFaivre says. Nevertheless, he points to startup opportunities in storage devices that can plug into the grid, and management software and hardware for things like smarter homes and buildings, and other faces of energy efficiency. “We’re moving toward an electric economy,” he says. “You can feed the grid with lots of sources like nuclear and solar, and others are interested in topping it off. There will be a rise in electric cars. Ultracapacitors have an important role to play. But a purely electric world doesn’t work—you still need renewable fuel. Airplanes need fuel.”

What about the role of big companies? LeFaivre says, “Google is most active in pushing an energy program. Everybody’s concerned about energy consumption. From a financial standpoint, they are finding ways to save money—like locating data centers next to dams.” Intel, he says, is trying to find ways to make processors use less power. And, he adds, “There are a lot of smart people in utilities.”

As for how it all will play out, LeFaivre doesn’t expect any big surprises. “I think we can see the trends now,” he says. “We’ve got to do better biofuels, develop the smart grid, develop storage devices. I do worry about the political aspects, like $40 oil…How you sustain this [cleantech effort] is very, very important.”